An aggressive investment strategy is one that involves taking on a higher level of risk in order to generate greater returns. Aggressive investors seek to maximize return by pursuing higher-risk investments and using more aggressive portfolio management techniques. These strategies range from the choice of particular assets to the allocation of the portfolio.
When selecting assets, the aggressive investor is likely to choose those that offer the highest potential return. This could involve investing in stocks and bonds rather than cash, commodities rather than stocks, international markets and investments, emerging markets, and other potentially high return assets.
In terms of asset allocation, an aggressive investment strategy usually involves a higher percentage of assets allocated to higher return, more volatile asset classes, such as stocks and foreign investments. Generally, the aggressive investor will reduce the allocation to lower-risk, lower return asset classes such as cash and bonds.
To obtain further potential return on their aggressive portfolio, the investor might also employ a variety of trading strategies. These include buying on margin, trading options, and short selling.
The aggressive investor should be aware that these strategies also come with a higher chance of losing money, as the market can be unpredictable and investments can suffer from volatile swings. To mitigate potential losses, the aggressive investor may also pursue strategies such as portfolio diversification or hedging.
Aggressive strategies have gained popularity over recent years as they offer investors the potential to generate above-market returns. However, after the financial crisis of 2008-10, investor trends have shifted away from aggressive strategies and active management, in favour of more passive index investing strategies. This change in trends has been partly attributed to the increasing availability of low-fee index funds and robotic investing services.
Overall, an aggressive investment strategy can offer significantly higher returns than more conservative approaches, but investors should be aware of the accompanying risks. That said, a well-thought out aggressive strategy combined with sound risk management measures can generate truly exceptional returns.
When selecting assets, the aggressive investor is likely to choose those that offer the highest potential return. This could involve investing in stocks and bonds rather than cash, commodities rather than stocks, international markets and investments, emerging markets, and other potentially high return assets.
In terms of asset allocation, an aggressive investment strategy usually involves a higher percentage of assets allocated to higher return, more volatile asset classes, such as stocks and foreign investments. Generally, the aggressive investor will reduce the allocation to lower-risk, lower return asset classes such as cash and bonds.
To obtain further potential return on their aggressive portfolio, the investor might also employ a variety of trading strategies. These include buying on margin, trading options, and short selling.
The aggressive investor should be aware that these strategies also come with a higher chance of losing money, as the market can be unpredictable and investments can suffer from volatile swings. To mitigate potential losses, the aggressive investor may also pursue strategies such as portfolio diversification or hedging.
Aggressive strategies have gained popularity over recent years as they offer investors the potential to generate above-market returns. However, after the financial crisis of 2008-10, investor trends have shifted away from aggressive strategies and active management, in favour of more passive index investing strategies. This change in trends has been partly attributed to the increasing availability of low-fee index funds and robotic investing services.
Overall, an aggressive investment strategy can offer significantly higher returns than more conservative approaches, but investors should be aware of the accompanying risks. That said, a well-thought out aggressive strategy combined with sound risk management measures can generate truly exceptional returns.